lvl/s. LAXIvll NARASTMHA INDUSTRIES v. Union of India

ORDER: (per Hon'ble Sri Justice Narsing Rao Nanctikonda) Ileard Mr.T.Pradyoth, learned counsel for the petitioner and Ms.J.Sunitha, learned Seniot Standing Counsel for the Income Tax Department appearing for the respondents. perused the record.

2. 'l'his is a writ petition where the proceedings are either challenged to the notices which were issued under Section 14gA and 148 of the Income Tax Act, 1961 (for short ,the Act,) or the assessment orders those have been passed under Section 147 of the Act which have been assailed.

3. This writ petition is being taken up today only on one of the grounds, that the notices issued under Section 14gA of the Act and the subsequent initiation of proceedings under Section 14g of the Act by the jurisdictional Assessing Officer, whereas in terms A.,- of the amendment that was brought to the Income Tax Act by way of Finance Act, 2021 w.e.f., 01.04.2021 onwards, proceedings \ 2 under Section l48A of the Act as also under Section 148 of the Act ought to have also been issued and proceeded in a faceless manner

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act, 2021 i.e., the impugned notices under Section 148,{ and Section 148 of the Act not being issued in a faceless rnanner, have alreadl,beer-r dealt with and decided by this Court in the case of K.\NKANALA RAVINDRA REDDY vs. INCOME-TAX OFFI(]ERr decided on 14.09.2023 whereby a batch of writ petitions wer,i allowed and the proceedings initiated under Section 148A as also nnder Section 148 of the Act were held to be bad with consequential reliels on the ground of it being in violation ofthe provisions olSection l51A of the Act read with Notillcation 1812022 dated 29.03.2t)22. The said judgment passed by this Court lras also been subsequc:ntly followed in a large number of writ petitions which were allolr'ed or.r sirnilar tems. '[(2023) 156 taxmann.cop 178 (Tetangana)] J

5. Down the line, we find that the same issue has also been decided against the Revenue by vanous High Courts i.e., by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIA3, punjab and Haryana High Court in the case of JATINDER. SINGII BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRI VENKATARAMANA RBDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where rhe issue was in respect of international taxation, Bornbay High Courl in the case of ABHIN ANILKUMAR SHAH T,s. INCOME TAX OFFICER, INTERNATIONAL TAXATION6 which is again on intemational taxation and central circle. High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUI(HBHAI 2 lzoz+1464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l " [(2024) 165 ta++mann.com I l5 (Punjab & Haryana)] '12024) 167 taxmann.com 4l I (Tclangana)l " 12024) 166 taxmann.com 679 (Bombay)l ' [2024) 1 65 laxmann.com I l 3 (Ilimachal Pradesh) l 4 DAHYABHAI RADADIYA VS. INCOME TA)i OFFICER, WARD 3(3X5)8, Jharkand High Courl in the case of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan lligh Court in the case of SHARDA DEVI CHHAJBR vs. IN,COME TAX OFFICER & ANOTHER and batch of writ pet tionsr{) which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta Iligh Court in the oase ol GIRDHAR GOPAL DALMIA vs. UNION OF li\IDIA & ORS (M.A.T 1690 of 2023), decided on25.09.2024

6. Even though the same issue having been decitled by a large number of High Courts, we are still confi'onted with lalge liting of identical matters on daily basis ranging between 5 to I 0 writ petitions. That upon the instructior-rs being souglht lrorn the Depa(ment, they have been taking a solitary ground that the decision of the Bombay High Courl in the case ol Hexawore Technologies Lld., (2 supra) as also the one which has been decided by this Courl in the case of Kanakalu Ravindrt Reddy 8zo2$@ online Guj 4012 " 2025 SCC Online Jhar 287 12023, RJ-JD :49 84-DB l o ' 5 (l supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 before the Hon'ble Supreme Court aud the Hon'ble Supreme Court is seized of the matter. In addition, there are about 1200 SLPs also filed arising our of the same issue being decided by various High Courts.

7. To a query being put to the learned counsel for the Revenue, tliey have categorically accepted the fact that there is no interin.r order granted by the Hon'ble Supreme Court in any ol these matters pending bcfble it. Meanwhile, lresh writ petitions of identical nature ale being pited up before this Bench on daily basis and the pendency is getting increased on matter which otherwise has already been dealt and decided by this very High Court itself.

8. On the one hand, even though the order of this Court that was passed as early as on 14.09.2023 and more 16 months have Iapsed, till date, we do not find any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance of notice under Section l48A and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions ^ 6 by all the rrajor High Courts in India are coniinuously still initiating proceedings under Section 148,{ of the Act and also initiating proccedings under Section 148 of the Act in contravention to the arrendments brought into the Income'['ax Act pursuant to thc Irinance Ac1,2020 as also thc Finance Act 202 t

9. Upon a query being put as to why can't this u lit petition be disposed of in the teeth of the decision rendered b1 this Court iu the case of Kanakala Ravindra Reddy (l supra), leamed Standing Counsel lbr tho Income 'l'ax Department contends thrrt thosc u,ould unnecessarily burden the Income Tax Deparlmen t where they would bc required to file equal number of SLI's bcforc thc Hon'ble Supreme Court and it would be further ruldening the exchequer of thc Union of India. It was also the contcntion of the leamed Standing Counsel that no prejudice would be causcd to thc interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLPs pending before the IJon'ble Supreme Court and the fact that the petitioner is alr':ady enioying the benefit of interim protection. Nonetheless, on tht: earlier query of this Court as to why the Income Tax Department have rlot col11c out with a rypchanism to issue appropriate instructi,rns or to take /l appropriate steps in ensuring that proceedings under Section l48A of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in the light ofthe decisions dedcided by the various High Courts, it rvas submitted by the leamed Standing Counsel that the said steps can only be taken at the level of CBDT as any such steps would have to be taken Pan India and cannot be limited to any of these jurisdictional High Courts.

10. As a result of whicli, what we are facing is steep increase of litigation day in and day out even though various orders have been passed by this High Court allowing writ petitions on the very same issue. The Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section I 5 t A of the Act and as a result by now, more than 600 to 700 petitions lrave been already got piled up before this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Retldy (l supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners \ 8 .1,,.. :, insofar as the liberty rvhich was granted to the Revenue fbr initiating fresh proceedings strictly in accordance with the atnended provisions of the Act, as amended by the Finance . \cL, 2020 ar.rd the f;inance Act, 2021 . The petitioner assessee woulc be entitlcd to challenge or raisc the other legal objections if the Re ,'ettue initiates fi'esh proceedings. The Department has made no cndeavour in availing the said libefty that was reserved for the Revenue. On thc contrary, they have been still sticking on to the stand, which this IIigh Court as r.vcll as rnany other High Courls alrca<11 hcld to bc bad. I l. It appears that because of the aforesaid liberty that this Higli Clourt had granted perrnitting the Revenue for iritiating tiesh proceedings as a one-time measure in a faceless rrranner. the Income 1'ax Departrnent wants to take advantage o i the same by plotlacting thesc proceedings which would enable thcm to meet the lirnitation that u,ould otherwise come in the way. L kewise. if thc writ petition is kept pending for a considerable long reriod of tirne and finally at a later stage if the Hon'ble Supreme ( or-rrt confirms tl.re decision taken by this High Court as also by the other High Courts in which the SLPs are still pending, the Income Tax 9 Department would get the advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings from the disposal of these matters at a much later stage which would be advantageous and beneficial to the Revenue and would be equally disadvantageous and detrirnental so far as interest of the assesses are concemed. As a consequence, the Income Tax Department gets an extended period of time for initiation of fresh proceedings. lr2. The alarming trend of docket explosion in this Court, despite the clear precedent set in Ktnokala Ravindro Reddy (l supra), is a matter of grave concern. The lncome Tax Department's persistent initiation of fresh proceedings, disregarding the established judiciat pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on the same issue. This deliberate approach not only undermines the principle of judiciat precedent but also strains the judicial resourccs unnecessarily. The Department's strategy of awaiting the Supreme Court's decision on pending SLPs while continuing to initiate fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adhering to the established tegal t 10 position. Such conduct raises serious questiors abor-rt the adrninistrative efficiency and the respect lirr judicial pronouncements, particularly when this Courl has alrcady providcd a balanced approaclr by prescrving botl-r the Revenuc's rights ar-rd assesses lnterests.

13. Another aspect which needs to be considered ir; that in fact it should have been rcalizcd by tl-re Income Tax Depaltrncnt itselland should have louncl out via media in ensuring that proceedings under Sections 148-,{ and 148 should not have becn issued in a faceless manner, at least till the Hon'ble Supreme Ccur-r decide tl-re trvelve hundred (1200) odd SLPs which it is already sciz-ed olor, at least the Income 'lax Department should have fotrrcl out some rcrnedial steps to ensure that wherever the authoriLics intend to initiate proceedings undcr Sections 148-A and 148, c,ther than in a laceless manner, the proceedings should have t,ccn dclcrrcd without precipitating the rnatter further intimating thc assessee that they shall initiate appropriate proceedings only after the SI-P's are decided by the Hon'ble Supreme Court on the verv sanre issue This again, the Income Tax Department, has not been able to give a convincing reply, except for the fact that such a decislon if at all 77 has to be taken, has to be taken for the whole of India, and which otherwise has to be by way of a policy decision and that too at the level of Central Board of Direct Taxes. Though the leamed Standing Counsel for the Income Tax Department contended that the Delhi High Court dismissed a writ petition of similar nature, on the one hand when the High Courl is struggting to reduce its pendency, such notices which are under challenge in this writ petition are forcing the assessee to knock the doors of this High Courl resulting in filing of hundreds of new writ petitions which in the long run not oniy afiects the disposal of the writ petitions but also consumes substantial time of the Bench in hearing these matters again and again on daily basis. Admittedly, in spite of the matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the lncome Tax Department. Yet, the authorities concemed at the State level are not ready to accept the verdict passed by a majority of High Courts of different States on the same issue; and to make things further worse, the Income Tax Department is showing \ audAcity by issuing notices continuously under Sections 148-A and L2 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

14. In the case ol BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXrr, on an issue ,vhether it was justifiable on the parl of the Income Tax Department rn not following an order passed by the adjudicating autholrty only on the ground that the appeals are pending, the Division Bench of the High Courl of Bornbay held at paragraph No.25 as urder, viz., "25. Itrlr. Paridwalla has rightly drawn out attent on to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision ,:f the co- ordinate Bench of this Court in Samp Furniture (P) Ltd. v. lTO13 of which one of us (Justice G.S. Kulkarni) was a member, wherein the Court categorically observed that the Revenue having not "accepted" the judgment of the High Court would not mean that till the same is set aside in a manner known to law, it wou d loose its binding force. Referring to the decision of the Supren e Coun in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the Court observed that the approach of the officials of Fevenue of treating decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. 11ZOZS1 170 taxmann.corn 422 (Bombay)l t' " 119'7811 13 ITR 589 (Bombay) " 120241165 taxrnann.com 581/300 Taxman 452 (Bombay) 'o 119921 raxmann.com I 6/55 ELT 433 (SC) 73 "6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual malafides but with the fact that the officers, in reaching in their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly cnticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. lt cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasijudicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellte Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy '14 rule is not followed, the result will only be Lrndue harassment to assesses and chaos in administration of tax laws.

12. We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observeLtions made by the High Court, have been harsh on the offrcers. lt is clear that the observations of the High Court, seemingly vehement, and apparenfly unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowerd to become widespread, could result in considerable harassment to the assesses-public without any benefit lo the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of juclicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." 1 5. What is worrying this Bench more is the lact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues rvhich have been laid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being v olative of the 15 Finance Act,2020 and Finance Act,202l . Now, in order to protect the interest of the Revenue as also that of the assessee) it would be trite at this juncture, if we dispose of the writ petition with an obserwation/direction that the disposal of the instant writ petition in telms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (1 supra) shall however be subject to the outcome of the SLPs which were filed by the Income Tax Dcpartment and which is pending consideration before the Hon'ble Supleme Court.

16. In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose ol matters u,hich are squarely covered by the decision of this Court and which stands lortified by the decisions of the various other High Courts on the very same issue, the pendency of this High Coun would further be burdened which otherwise can be decided and disposed of as a covered matter

17. So far as the interest of the Revenue is concemed, we are of thc considered opinion that the interest of the Revenue has already bccn considered and protected, as has been observed in paragraphs 16 36,37 and 38 ofthc order which, for ready reference. is reploduced hereunder':

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the resplndent- Department is neither tenable, nor sustitinable. The notices so issued and the procedure adopteC being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondenlDepartment pursuant to the notices issued under Seclion 147 and 148 would al:;o get quashed and rt is ordered accordingly. The reason we are quashing the consequential order is on the pr nc ples that when the initiation of the proceedtngs its,'lf was procedurally wrong, the subsequent orders also gets nullified automatically.

37. The preliminary objection rarsed by the petilioner rs sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since lhe impugned notices and orders are getting quashed on the pornt of jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitione'' which stands reserved to be raised and contendec in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in t te case of Ashish Agarwal, supra, 2s a one-time nteasure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to 1;roceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right 17 conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Agarwal, supra.

18. We would only further like to make obserwations that since wc are inclined to dispose of the instant wrii petition, conscious of the fact that the earlier order of this High Court in the case of Kunukals Rtvindrs Reddy (l supra) is subjected to challenge belore the Hon'ble Supreme Court in SLP No.3574 of 2024, prelerred by the Income Tax Department, we make it clear that I allowing of the instant writ petition is subject to outcome of the afbresaid SLP preferred by the Revenue against the decision ofthis Lligh Courl in the case of Kanakala Ravindra Reddy (l supra). Tl.ris, in other words, would mean that either of the parties, if they so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Courl in the pending SLP on the very same issue.

19. Accordingly, the instant writ petition stands allowed in f'avour of the assessee so lar as the issue of jurisdiction ls concemed. As a consequence, the impugned notice under challenge r"rnder Sections 148-A and 148 stands set aside/quashed. 18 The consequential orders, if any, also stand set asideiquashed in similar terms as have been passed by this High Courl irr the case of I{ankanalu Ravindro Reddv (l supra). There shall be no order as to costs Consequently, miscellaneous petitions pending. if any, shall stand closed To, //TRUE COPY// SD/. T.JAYASREE DEPUTY REGISTRAR '.:,,f_ SECTION OFFICER 'l . The Secretary, Department of Revenue, Ministry of Finance, New Delhi. 2. The lncome Tax Officer, lV ar.l 2., Karimnagar, lncorre Tax Office, Aayakar Bhavan, Near Natraj Theatre, Karimnagar - SOSOOt 3- The Assessqrgnt _Unit, National Faceless Assessmerrt Center, lncome Tax Department, Ne.+r Delhi.

4. One CC to SRI T.PRADYOTH, Advocate tOpUCl 5. One CC to tvls. J.SUN|IHA, Sr. SC FOR tf tOpUCl 6. One CC to SRI GAD| PRAVEEN KUMAR, DEpUTy SOL|C|TOR GENERAL - " - OF lNDlA, High Court forthe State of Tetangana at Hycterabad iOpUCj

7. Two CD Copies d- BS TKS ) HIGH COURT DATED:0210712025 t d ORDER WP.No.18787 of 2025 :i l4 ,t ()^ 10 sEP 2[6 t l-l / ALLOWING THE WRIT PETITION, WITHOUT COSTS